SmartFinancial's (NYSE:SMBK) Dividend Will Be $0.08

SmartFinancial, Inc. (NYSE:SMBK) has announced that it will pay a dividend of $0.08 per share on the 28th of May. This payment means the dividend yield will be 1.5%, which is below the average for the industry.

Check out our latest analysis for SmartFinancial

SmartFinancial's Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

SmartFinancial has a short history of paying out dividends, with its current track record at only 4 years. While it has a shorter history of paying out dividends, SmartFinancial's payout ratio of 20% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

The next year is set to see EPS grow by 18.2%. If the dividend continues on this path, the future payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.

SmartFinancial Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. The annual payment during the last 4 years was $0.20 in 2020, and the most recent fiscal year payment was $0.32. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately, SmartFinancial's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While EPS growth is quite low, SmartFinancial has the option to increase the payout ratio to return more cash to shareholders.

In Summary

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for SmartFinancial that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.